IN THE MATTER OF HACKENSACK UNIVERSITY MEDICAL CENTER'S APPEAL OF THE 2010 GRADUATE MEDICAL EDUCATION PAYMENT ALLOCATION 2011 -

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

 

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3302-09T3

IN THE MATTER OF HACKENSACK

UNIVERSITY MEDICAL CENTER'S

APPEAL OF THE 2010 GRADUATE

MEDICAL EDUCATION PAYMENT

ALLOCATION.

_____________________________________

September 9, 2011

 

Argued January 20, 2011 - Decided

Before Judges Fuentes, Gilroy and Nugent.

On appeal from the Division of Medical

Assistance andHealth Services,Department

of Human Services.

 

Brian M. Foley argued the cause for appellant

Hackensack University Medical Center (Schenck,

Price, Smith & King, attorneys; Mr. Foley,

of counsel and on the brief).

 

Dianna Rosenheim, Deputy Attorney General,

argued the cause for respondent Division of

Medical Assistance and Health Services

(Paula T. Dow, Attorney General, attorney;

Melissa H. Raksa, Assistant Attorney General,

of counsel; Ms. Rosenheim, on the brief).

 

PER CURIAM

Hackensack University Medical Center (Medical Center or HUMC) appeals the final determination of the New Jersey Division of Medical Assistance and Health Services (DMAHS or the Division) finding the Medical Center ineligible for the Graduate Medical Education (GME) reimbursement subsidy for state fiscal year 2010. The Medical Center argues that the decision must be overturned because it was arbitrary, capricious, unreasonable, and not supported by the record. The Division contends it applied the correct methodology for determining eligibility for the reimbursement according to the regulations governing it, as well as the Division's own precedent. Based on the standard of review applicable to decisions made by state administrative agencies, we affirm.

I

As required under N.J.A.C. 10:52-8.5(a), DMAHS performs an annual calculation to determine the distribution of funds for (GME) reimbursement payments. GME reimbursements are funding allocations made to eligible teaching hospitals based on the number of resident and intern physicians the hospitals employ, as well as the amount of services provided by the hospitals to certain Medicaid patients. N.J.A.C. 10:52-8.6(a) establishes the following formula for determining a hospital's eligibility for GME reimbursement in a given year:

Effective for payments on or after July 6, 1998, the amount appropriated for GME shall be distributed to all eligible acute care teaching hospitals. An eligible acute care teaching hospital is defined as an acute care teaching hospital that has a combined Medicaid and NJ FamilyCare-Plan A1 fee-for-service2 utilization at or above the median of all New Jersey acute care hospitals. The Medicaid and NJ FamilyCare-Plan A fee-for-service utilization is calculated using the hospital-specific Medicaid and NJ FamilyCare-Plan A fee-for-service days divided by the hospital-specific total days.3

 

Under this formula, a percentage (termed the "utilization rate") is calculated for each acute care teaching hospital in the state by dividing the number of Medicaid and NJ FamilyCare-Plan A days the hospital provided during the relevant calculation period by the total number of days of patient care provided by the hospital. The hospitals are then ranked based on their designated utilization rates, and the median percentage is determined. GME funding is made available to the hospitals with a utilization rate at or above that median.

N.J.A.C. 10:52-8.5 provides further information about the GME reimbursement calculation:

(a) Effective for payments on or after July 6, 1998, the GME payment shall be distributed in 12 monthly lump sum payments during the State Fiscal Year [SFY]. The amount distributed shall be considered the final GME payment and shall not be reconciled.

. . . .

 

(b) The source of the data used to allocate the GME payment is the most recent Medicare submitted cost report with corresponding 24-month fee-for-service Medicaid and NJ FamilyCare-Plan A inpatient paid claims data as of February 1 prior to the year of distribution. GME resident full-time-equivalents [for purposes of the calculation made under N.J.A.C. 10:52-8.6(b)] and total hospital days shall come from the Medicare submitted cost report. The hospital-specific Medicaid and NJ FamilyCare-Plan A fee-for-service days shall come from the 24-month data fee-for-service Medicaid and NJ FamilyCare-Plan A inpatient paid claims data.

 

For SFY 2010, the year at issue in this appeal, the Legislature appropriated $60,000,000 for GME reimbursement. On July 15, 2009, DMAHS released the SFY 2010 GME reimbursement allocation report ("the report"), along with supporting figures. The report provided for zero dollars in GME reimbursement to HUMC. The report indicated that, in the previous year, HUMC received $4,111,820 in GME reimbursement out of $68,000,000 in total reimbursement allocated to eligible hospitals.

The report indicated that appellant's SFY 2010 utilization rate, for purposes of eligibility under N.J.A.C. 10:52-8.6(a), was calculated at 5.44%, which placed appellant one slot below the median percentage of 5.45%, thus disqualifying it from reimbursement. The report stated appellant's utilization rate was calculated based on a finding of 12,641 Medicaid and NJ FamilyCare-Part A fee-for-service days and 232,448 total hospital days4 ((12,641 / 232,448) X 100 = 5.44). Riverview Hospital, the facility ranking immediately ahead of HUMC and thus the last hospital eligible for funding, had a calculated utilization rate of 5.46% based on 3,122 fee-for-service days and 57,137 total days.

HUMC challenged this decision. On July 30, 2009, HUMC and DMAHS representatives met to review the data used by DMAHS to calculate the SFY 2010 GME reimbursement. HUMC sought the opportunity to supplement the record with additional patient data which could result in an adjustment of the hospital's utilization rate percentage - particularly, evidence of an additional sixty-one fee-for-service patient days which, if included in the calculation, would result in the hospital's utilization rate rising above the 5.45% median ((12,641 + 61) / 232,448) X 100 = 5.4644%). DMAHS agreed to consider additional patient information from HUMC.

On August 27, 2009, HUMC submitted data about a single patient with an eighty-three-day hospital stay, whose original claim for payment as submitted by HUMC reported Medicaid as a secondary payment source but which was ultimately paid in full by Medicaid when no payment was made by the listed primary payer. On September 14, 2009, HUMC submitted a list of additional patients which the Medical Center described as

accounts that were discharged, processed and paid by Medicaid as the primary payer in 2007 (91 days); accounts that were discharged in 2007 and paid by Medicaid as the primary payer in 2008 (22 days); accounts that were paid by Medicaid as the primary payer for patients that had identified other insurance, but were not eligible for such other insurance (70 days); accounts paid by Medicaid as the primary payer in 2007 but recovered in 2008 (11 days); accounts discharged in 2007 and paid by Medicaid as the primary payer in 2009 (3 days); and the account of the patient previously identified, for whom Medicaid paid as the primary payer (83 days); for a total of 280 additional Medicaid days.

 

On September 23, 2009, DMAHS accepted 42 of these 280 additional submitted patient days, bringing HUMC's total fee-for-service days to 12,683, still short of the number needed to raise its utilization rate above the median.

That same day, HUMC submitted an additional list of fourteen fee-for-service patients who had been discharged and readmitted within 7 days of the discharge; HUMC claimed the days during the patients' readmittance period provided an additional sixty-eight fee-for-service days toward its total. DMAHS rejected this claim, finding that "[w]hen the hospital billed for the second admission the claim was denied and these additional days are not included in the hospital's settlement data." DMAHS further stated that "[h]ospitals are informed that for these cases they are to void the first bill and resubmit a bill incorporating both service periods . . . [t]he hospital chose not to void and resubmit the 14 claims."

On September 24, 2009, HUMC submitted information about seven additional patients comprising a total of seventy-two patient days, which HUMC stated "were not included in [their] 24 month data base but were paid as primary due to DYFS (Division of Youth and Family Services) Hold Day & other issues" and therefore "should be billed as [Medicaid] primary." DMAHS rejected these additional days, finding that "[o]ne of the 7 [claims] was paid in 2009 which is beyond the 24 month cutoff; the remaining 6 were included in the detail sent to the hospital and included in the original claim set. The additional DYFS days are residential days and are not allowable."

On September 30, 2009, HUMC submitted additional accounts totaling 145 days that the hospital stated "were in [their] billing system with a transaction code of Medicaid payments . . . but were not list[ed] on the 24 month report." A DMAHS representative responded on October 2, 2009, stating that "[t]he data does not have enough information that would allow [her] to research the claims" and seeking the "beneficiary information" for the claims. HUMC provided the requested information that same day.

On October 26, 2009, DMAHS provided HUMC with a summary of DMAHS's overall review of the additional patient information submitted on behalf of the Medical Center's appeal. The summary confirmed that DMAHS was accepting only the forty-two additional Medicaid fee-for-service days acknowledged on September 23, 2009. The additional 145 days submitted by HUMC on September 30, 2009, were deemed unallowable for the GME calculation for the following reasons:

Denied claim (42 days)

 

HMO paid claim; denied claim for the hospital (46 days)

 

Voided claim (3 days)

 

Not a Medicaid or Family Care Plan A recipient (24 days)

 

Unable to locate; incorrect recipient number given (30 days)

 

By letter dated November 3, 2009, HUMC Executive Vice President and CFO Robert Glenning responded to DMAHS's summary of the additional patient information provided by the hospital. In addition to reiterating the arguments made by HUMC regarding the rejected patient days, Glenning argued that an additional 1,383 patient days for out-of-state Medicaid patients should have been counted towards HUMC's fee-for-service days because "[t]he law makes no distinction on [the matter of in-state vs. out-of-state Medicaid claims] as it clearly states the count should include all Medicaid days."

On February 5, 2010, DMAHS issued its final agency decision on this matter, concluding that "the additional documentation supplied by the hospital is not sufficient to warrant an adjustment to the SFY 2010 GME subsidy payment schedule." HUMC now appeals from this decision.

II

The Medical Center argues that the decision reached by DMAHS denying an adjustment to the SFY 2010 subsidy payment schedule to include all eligible Medicaid days was arbitrary, capricious, unreasonable, and not supported by the record. We disagree.

As this record reflects, the reimbursement process at issue is governed by a complex regulatory scheme. The agency charged with the responsibility of administering this program is presumed to have the technical expertise to review the data submitted by the hospitals to determine whether they are eligible to receive the limited resources allocated by the Legislature in any one fiscal year.

On appeal from a final agency determination, we can intervene only in those

rare circumstances in which an agency action is clearly inconsistent with its statutory mission or with other State policy. Although sometimes phrased in terms of a search for arbitrary or unreasonable agency action, the judicial role is generally restricted to three inquiries: (1) whether the agency's action violates express or implied legislative policies, that is, did the agency follow the law; (2) whether the record contains substantial evidence to support the findings on which the agency based its action; and (3) whether in applying the legislative policies to the facts, the agency clearly erred in reaching a conclusion that could not reasonably have been made on a showing of the relevant factors.

 

[Mazza v. Bd. of Trs., Police & Firemen's Retirement Sys., 143 N.J. 22, 25 (1995) (citation omitted).]

 

We also employ an enhanced "substantial deference" standard when we review an agency's decision applying or interpreting a statute or regulation it is charged with enforcing. In re August 16, 2007 Determination of NJDEP, 414 N.J. Super. 592, 601 (App. Div.), certif. denied, 205 N.J. 16 (2010).

We discern no legal basis to interfere with the decision reached by DMAHS. The data submitted by HUMC was considered and rejected by DMAHS after applying the standards it is charged with enforcing. The arguments raised by the Medical Center before us mirror those rejected by DMAHS. We are not in a position to substitute our judgment for the well-reasoned position adopted by DMAHS.

Affirmed.

1 "'NJ FamilyCare-Plan A' means the State-operated program, which provides comprehensive, managed care coverage, including all benefits provided through the New Jersey Care . . . Special Medicaid Programs, to eligible children below the age of 19 with family incomes up to and including 133 percent of the Federal poverty level, children under the age of one year, pregnant women eligible under the New Jersey Care . . . Special Medicaid Programs, pregnant women up to 200 percent of the Federal poverty level, AFDC-related children under age 21 and TANF/AFDC-RELATED Medicaid patients. In addition to covered managed care services, eligibles may access certain other services, which are paid fee-for-service." N.J.A.C. 10:49-1.3.

2 Fee-for-service Medicaid and NJ FamilyCare-Plan A claims are defined by DMAHS as those which are not covered by an HMO. According to DMAHS, "[t]here are currently four HMOs providing Medicaid managed care coverage. The HMOs are paid prospective rates by DMAHS that have GME amounts factored in, which they can pass on to teaching hospitals pursuant to their contract with those hospitals." Further, N.J.A.C. 10:52-1.1(b), titled "Purpose and Scope", states that "[u]nless otherwise stated, the rules of [Chapter 52] apply to Medicaid and NJ FamilyCare fee-for-service beneficiaries and to Medicaid and NJ FamilyCare fee-for-service services which are not the responsibility of the managed care organization with which the beneficiary is enrolled."

3 N.J.A.C. 10:52-8.6(a) establishes the formula to determine which hospitals are eligible to share in the total amount of GME reimbursement funding available. N.J.A.C. 10:52-8.6(b) establishes the formula by which the specific percentage of total funding to be awarded to each eligible hospital is determined, a calculation that takes into account, in part, the number of intern and resident physicians each eligible hospital employs. Because appellant is only contesting the initial determination of eligibility under N.J.A.C. 10:52-8.6(a), the formula set forth in N.J.A.C. 10:52-8.6(b) need not be considered in detail here.

4 DMAHS states that these numbers were drawn from HUMC's "2007 Medicare cost report and corresponding DMAHS fee-for-service data," as required under N.J.A.C. 10:52-8.5(b).